Retail inflation will trend a tad below the 6% mark by February/March: Morgan Stanley

Morgan Stanley headquarters (Image: Bloomberg)

Indian retail inflation will slip a bit below the 6% mark by February or March, Morgan Stanley said as the global financial services firm sees gradual moderation in the consumer price index (CPI) going ahead.

This comes after data showed yesterday that retail inflation had touched a five month high of 7.41 percent in September as food prices reached the highest level since December 2020.

Fuel inflation, in contrast, decelerated to a three-month low of 10.4% year on year in September from 10.8% in August, while it picked up 0.4%
month on month in September from -0.4% in the previous month.

Core inflation (excluding food, fuel) rose a tad in September to 6%
year on year after staying steady at 5.9% in July and August.

Upasana Chachra, chief India economist at Morgan Stanley, said: “The September CPI print breached the 7% mark, in line with expectations, owing to a pickup in food prices. From here, however, we expect inflation to gradually decelerate, partially helped by easing global commodity prices. As such, we expect a gradual moderation in inflation with CPI trending a tad below the 6% mark by February/March 2023. We expect CPI inflation to average 6.5% in FY2023. Risks to the upside could emerge from unexpected changes in food or commodity price trajectories.”